MARKET REPORT: 'Rule of six' policy spells more gloom for the FTSE 250


There was more gloom for the FTSE 250 as the Government’s ‘rule of six’ policy sent investors fleeing from pub, leisure and travel stocks.

The mid-cap index fell for a second day as traders digested the news that crowds of more than six people meeting will be banned in England from Monday, to slow the rapidly spreading coronavirus.

The rules apply to pubs and restaurants but they will be able to remain open to multiple groups of six-or-fewer because of the strict hygiene rules they are following.

The FTSE 250 fell for a second day as traders digested the news that crowds of more than six people meeting will be banned in England from Monday

The FTSE 250 fell for a second day as traders digested the news that crowds of more than six people meeting will be banned in England from Monday

Test-and-trace efforts, previously voluntary, will now be mandatory. If traders were meant to feel reassured, they were not.Instead, it fanned fears of further lockdowns and dented fragile consumer confidence that so recently started to rise again.

Wetherspoon was the sharpest faller on the mid-cap index, which is more exposed to what happens to events within the UK than the export-focused FTSE 100.

The pub chain’s shares sank 9.5 per cent, or 99p, to 947p, while Cineworld plunged 7.4 per cent, or 4.24p, to 52.78p, train and airport station cafe owner SSP slid 6.3 per cent, or 16p, to 236.6p, and WH Smith, which has become reliant on the performance of its shops at transport hubs, fell 4.23 per cent, or 51p, to 1137p.

In all, the FTSE 250 fell 0.2pc, or 30.25 points, to 17,594.93

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Stock Watch – Redx Pharma 

Redx Pharma surged after it clinched a lucrative deal with Nasdaq-quoted Jazz Pharmaceuticals. The pair will develop targeted treatments that could interrupt and block the spread of cancer.

AIM-listed biotech firm Redx will receive £7.7million upfront, £7.7million in the second year of the deal and up to £309million if it reaches various milestones, as well as royalties payments.

This is the second deal Redx has secured in a matter of weeks. Shares rose 14.3 per cent, or 7.5p, to 60p.   

The crisis also hit stocks on the FTSE All-Share index, where Marston’s dropped 8.5 per cent, or 4.38p, to 47.22p and Wagamama-owner Restaurant Group slid 11 per cent, or 7.05p, to 57.3p.

Of course, the ‘rule of six’ wasn’t all that traders had to contend with yesterday.

A setback in AstraZeneca’s Covid-19 vaccine trial, which has been temporarily paused after one participant fell ill, also made the market nervous.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the news had ‘a domino effect’ on British Airways owner IAG (down 3.6 per cent, or 7.4p, to 200.4p), Holiday Inn owner Whitbread (3.6 per centlower, down 87p, to 2364p) and Intercontinental Hotels Group (down 2.7 per cent, or 121p, to 4356p).

After a tricky day, however, AstraZeneca managed to rise, finishing 0.5 per cent higher, or 38p, to 8386p, while the Footsie rose 1.4 per cent, or 82.54 points, to 6012.84

Oxford Biomedica, the Oxford University spin-off that had recently signed a manufacturing deal with Astra for the vaccine, was not so lucky, falling 3.3 per cent, or 28p, to 832p.

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BT got a second wind from an upgrade from brokers at Barclays, which hoisted its target price for shares from 130p to 160p on a ‘rapidly improving outlook’ for the Openreach division. The company’s shares climbed 5.6 per cent, or 5.85p, to 110p.

Aston Martin revved up after analysts at Bernstein started covering the luxury car maker, slapping it with an ‘outperform’ rating and saying that it is good value for money.

Brokers believe the pandemic will push people to drive more and tipped premium brands such as Aston to be in high demand for older drivers. Shares rose 6.6 per cent, or 3.65p, to 59.15p.

Battle body armour-maker Avon Rubber rose 6.3 per cent, or 235p, to 3950p, after it agreed to buy Team Wendy, a helmet maker, in a £100million deal that comes shortly after Avon agreed to sell off its dairy equipment division.

Elsewhere, beleaguered energy group Tullow Oil dived 17.5 per cent, or 3.39p, to 16.04p after it swung to a £1billion loss and warned it was at risk of defaulting on one of its debts. 

It is exploring ‘various refinancing alternatives’. Oil prices began to claw back from steep losses on Monday, rising above the $40 a barrel mark again.

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